Pennies and nickels

ADM is asking a broke Illinois for money

For a lot of people in Springfield, Decatur is just a place to stop when you get hungry on the way back from a U of I game. But people live there too – at least some still do; the city has lost nearly 20 percent of its population since 1980. And it’s going to lose a few more. In September Archer Daniels Midland, the giant grain processor and junk food enabler, announced that it was splitting off about 100 people from its Decatur headquarters staff. It plans to open a new global headquarters, probably in Chicago.

As I understand it, Decatur will remain ADM’s North American headquarters, with a staff of more than 4,000. (Springfield’s two biggest non-hospital private sector employers each employ about one-quarter that many.) It was not the loss of jobs that hurts as much as the loss of self-image. Decatur was long justifiably proud of its standing as one of Illinois’ significant industrial cities. But managing things rather than making things is what wins prestige in today’s world, and being an international headquarters city of a Fortune 50 company allowed Decatur to look Bloomington (State Farm) and Peoria (Caterpillar) in the eye and to look down its nose at Springfield.

A company spokesperson explained to the press that the move will be made mainly because Decatur doesn’t have an international airport. A company like ADM moves more suits from place to place than a Men’s Wearhouse, and having to get from Decatur to an O’Hare to catch a plane to Australia for a meeting, she pointed out for the TV reporters in the room, “adds to your trip.” It is 9,142 air miles from Decatur to Sydney. Were ADM execs able to fly direct from O’Hare, they would save 186 miles, shortening the one-way trip by – let’s see, where’s my pencil? – two percent.

The real reason for the move has less to do with Decatur’s lack of an international airport than its lack of everything else. Getting top-class people to move to a desiccated industrial city in the middle of nowhere is probably the hardest sell that ADM ever has to make. As the ADM flack put it, “We also need an environment where we can attract and retain employees with diverse skills and where family members can find ample career opportunities.”

Well, yes. There’s no question about the value of a city like Chicago to the executives of a company like ADM. But what is the value of a corporate HQ to a city like Chicago? The demand for therapists (for the wives and kids) will increase somewhat, but overall corporate lords do little to boost a place economically. As for the new global HQ’s benefit to the State of Illinois, eyebrows were raised when ADM panhandled the General Assembly, asking for special legislation to allow it to claim tax credits worth around $1.2 million annually for 20 years to locate it in Chicago rather than some other state. Illinois already has relocation tax incentives on the books in the form of credits that lower the income taxes that a relocating company owes the state, but apparently the company’s corporate income tax liability to the state is minimal some years, which means conventional tax credits would be worth little.

Does ADM need the money to make the move? Of course not; O’Hare, not taxes, is what matters to ADM about Illinois. I’ll say again what I said last year when I complained about the incentives Mr. Quinn unwisely approved to keep Sears from leaving Hoffman Estates. (See “Such a deal,” Jan. 26, 2012.) Rather than giving ailing companies what they want, the State of Illinois should concentrate on giving good companies what they need – good schools that produce skilled workers, fair taxes and reliable infrastructure.

ADM wants the money because they want money. It’s what they do. ADM’s top money guy told the House that the company has been successful because it “has been minding its pennies and nickels and dimes over the years.” Actually, they are the taxpayers’ pennies and nickels, and Illinois needs them a lot more than ADM does. State of Illinois revenues in Fiscal Year 2012 were $33.1 billion. Those of ADM for 2012 were $90.6 billion.

Under the circumstances, ADM’s demand that the people give it money to do what the company intends to do anyway shows remarkably ill grace. The company has grown fat eating public money in the form of direct subsidies or by selling its products in a market rigged in its favor by the people’s representatives that it buys and sells like any other raw material it needs. Rather than bribe ADM to stay in Illinois, the people’s representatives would do better to bribe them to get the hell out.